Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Universal Reports Third Quarter 2023 Results By: Universal Insurance Holdings via Business Wire October 26, 2023 at 16:10 PM EDT Loss per common share of $0.20; adjusted* loss per common share of $0.16 Direct premiums written of $532.0 million, up 6.3% from the prior year quarter Net combined ratio of 110.7%, down 28.5 points from the prior year quarter Book value per share of $10.33, up 21.0% year-over-year; adjusted book value per share of $14.00, up 13.5% year-over-year Repurchased approximately 894 thousand shares for $12.3 million. Total capital returned to shareholders of $17.2 million, including $0.16 per share regular quarterly dividend Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2023 results. “The third quarter benefited from strong and improving underlying trends and I’m optimistic as I look forward,” said Stephen J. Donaghy, Chief Executive Officer. “During the quarter, Hurricane Idalia made Florida landfall, and, as always, we were there immediately to assist our policyholders in their time of need. The storm’s severity appears considerably smaller than initially anticipated and is comfortably absorbed within our retention. We continue to enhance our best-in-class claims infrastructure, which together with our reinsurance capabilities, serves to differentiate us from our peers. As we look forward, we are more confident in the Florida market, which is our largest geography, and have started to slowly increase new business in additional territories.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change GAAP comparison Total revenues $ 360,048 $ 312,810 15.1 % $ 1,016,126 $ 892,298 13.9 % Operating income (loss) $ (6,246 ) $ (91,607 ) (93.2 )% $ 67,349 $ (55,117 ) NM Operating income (loss) margin (1.7 )% (29.3 )% 27.6 pts 6.6 % (6.2 )% NM Net income (loss) available to common stockholders $ (5,918 ) $ (72,278 ) (91.8 )% $ 46,816 $ (47,376 ) NM Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) (91.5 )% $ 1.54 $ (1.54 ) NM Annualized ROCE (7.4 )% NM* NM 21.2 % (18.3 )% NM Book value per share, end of period $ 10.33 $ 8.54 21.0 % 10.33 $ 8.54 21.0 % Non-GAAP comparison1 Core revenue $ 361,764 $ 316,668 14.2 % $ 1,015,060 $ 909,103 11.7 % Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) (94.8 )% $ 66,283 $ (38,312 ) NM Adjusted operating income (loss) margin (1.3 )% (27.7 )% 26.4 pts 6.5 % (4.2 )% NM Adjusted net income (loss) available to common stockholders $ (4,624 ) $ (69,369 ) (93.3 )% $ 46,012 $ (34,705 ) NM Adjusted diluted earnings (loss) per common share $ (0.16 ) $ (2.27 ) (93.0 )% $ 1.51 $ (1.12 ) NM Annualized adjusted ROCE (4.4 )% NM* NM 15.4 % (11.1 )% NM Adjusted book value per share, end of period $ 14.00 $ 12.33 13.5 % $ 14.00 $ 12.33 13.5 % Underwriting Summary Premiums: Premiums in force $ 1,914,493 $ 1,833,034 4.4 % $ 1,914,493 $ 1,833,034 4.4 % Policies in force 807,553 872,926 (7.5 )% 807,553 872,926 (7.5 )% Direct premiums written $ 531,988 $ 500,677 6.3 % $ 1,489,216 $ 1,429,685 4.2 % Direct premiums earned $ 474,311 $ 452,450 4.8 % $ 1,393,003 $ 1,295,858 7.5 % Ceded premiums earned $ (143,271 ) $ (161,819 ) (11.5 )% $ (476,465 ) $ (459,102 ) 3.8 % Ceded premium ratio 30.2 % 35.8 % (5.6) pts 34.2 % 35.4 % (1.2) pts Net premiums earned $ 331,040 $ 290,631 13.9 % $ 916,538 $ 836,756 9.5 % Net ratios: Loss ratio 87.0 % 113.7 % (26.7) pts 78.3 % 85.5 % (7.2) pts Expense ratio 23.7 % 25.5 % (1.8) pts 25.2 % 27.7 % (2.5) pts Combined ratio 110.7 % 139.2 % (28.5) pts 103.5 % 113.2 % (9.7) pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income available to common stockholders, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income available to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss available to common stockholders was $5.9 million, compared to a loss of $72.3 million in the prior year quarter, and adjusted net loss available to common stockholders was $4.6 million, compared to a loss of $69.4 million in the prior year quarter. The improvement in adjusted net loss available to common stockholders mostly stems from better underwriting income and net investment income. Revenues Revenue was $360.0 million, up 15.1% from the prior year quarter and core revenue was $361.8 million, up 14.2% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue. Direct premiums written were $532.0 million, up 6.3% from the prior year quarter. The increase stems from 4.4% growth in Florida and 14.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $474.3 million, up 4.8% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 30.2%, down from 35.8% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program and direct premiums earned growth associated with primary rate increases, partly offset by higher reinsurance pricing and higher reinsurance costs associated with an increase in home values. Net premiums earned were $331.0 million, up 13.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above. Net investment income was $12.8 million, up from $6.1 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash. Commissions, policy fees and other revenue were $18.0 million, down 10.0% from the prior year quarter. The decrease primarily reflects the difference in pricing and structure associated with our reinsurance program when compared to the prior year and a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 1.7%, compared to a GAAP operating loss margin of 29.3% in the prior year quarter and the adjusted operating loss margin was 1.3%, compared to an adjusted operating loss margin of 27.7% in the prior year quarter. The improvement in the adjusted operating loss margin primarily reflects a lower net combined ratio and higher net investment income. The net loss ratio was 87.0%, down 26.7 points compared to the prior year quarter. The decrease reflects a lower current accident year net loss ratio, primarily stemming from lower weather-related losses. The net expense ratio was 23.7%, down 1.8 points from 25.5% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 110.7%, down 28.5 points compared to the prior year quarter. The decrease reflects lower net loss and expense ratios, as described above. Capital Deployment During the third quarter, the Company repurchased approximately 894 thousand shares at an aggregate cost of $12.3 million. The Company currently has $7.8 million of share repurchase authorization remaining. On July 20, 2023, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 11, 2023, to shareholders of record as of the close of business on August 4, 2023. Conference Call and Webcast Friday, October 27, 2023 at 10:00 a.m. ET Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BIcde2db8d22eb43b9be5e115c575ebeb9. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors soon after the investor call concludes. About Universal Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at universalinsuranceholdings.com. Non-GAAP Financial Measures and Key Performance Indicators This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (“SEC”), including core revenue, adjusted net income available to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders’ equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE’s business trends and to understand UVE’s operational performance. UVE’s management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Forward-Looking Statements This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “will,” “plan,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading “Risk Factors” and “Liquidity and Capital Resources” in our 2022 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company’s operations and future results, refer to the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2023 2022 ASSETS: Invested Assets Fixed maturities, at fair value $ 1,031,558 $ 1,014,626 Equity securities, at fair value 76,995 85,469 Investment real estate, net 5,572 5,711 Total invested assets 1,114,125 1,105,806 Cash and cash equivalents 343,532 388,706 Restricted cash and cash equivalents 69,488 2,635 Prepaid reinsurance premiums 379,501 282,427 Reinsurance recoverable 322,986 808,850 Premiums receivable, net 88,536 69,574 Property and equipment, net 48,729 51,404 Deferred policy acquisition costs 114,590 103,654 Goodwill 2,319 2,319 Other assets 75,049 74,779 TOTAL ASSETS $ 2,558,855 $ 2,890,154 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 551,007 $ 1,038,790 Unearned premiums 1,040,067 943,854 Advance premium 76,030 54,964 Reinsurance payable, net 388,294 384,504 Long-term debt, net 102,196 102,769 Other liabilities 99,759 77,377 Total liabilities 2,257,353 2,602,258 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 473 472 Treasury shares, at cost - 18,080 and 16,790 (257,143 ) (238,758 ) Additional paid-in capital 115,922 112,509 Accumulated other comprehensive income (loss), net of taxes (107,115 ) (103,782 ) Retained earnings 549,365 517,455 Total stockholders' equity 301,502 287,896 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,558,855 $ 2,890,154 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,266 and 47,179 shares; Outstanding 29,186 and 30,389 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 REVENUES Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Net investment income 12,755 6,074 34,735 15,337 Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Commission revenue 10,830 12,592 43,098 35,157 Policy fees 5,111 5,272 14,662 15,991 Other revenue 2,028 2,099 6,027 5,862 Total revenues 360,048 312,810 1,016,126 892,298 EXPENSES Losses and loss adjustment expenses 287,972 330,444 717,853 715,854 Policy acquisition costs 53,180 54,609 156,877 163,432 Other operating expenses 25,142 19,364 74,047 68,129 Total operating costs and expenses 366,294 404,417 948,777 947,415 Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 Income (loss) before income tax expense (benefit) (7,877 ) (93,237 ) 62,453 (60,086 ) Income tax expense (benefit) (1,962 ) (20,962 ) 15,629 (12,718 ) NET INCOME (LOSS) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Weighted average common shares outstanding - basic 29,617 30,604 30,087 30,858 Weighted average common shares outstanding - diluted 29,617 30,604 30,378 30,858 Shares outstanding, end of period 29,186 30,513 29,186 30,513 Basic earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.56 $ (1.54 ) Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 10.33 $ 8.54 $ 10.33 $ 8.54 Annualized return on average common equity (ROCE) (7.4 )% NM* 21.2 % (18.3 )% *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Premiums Direct premiums written - Florida $ 430,946 $ 412,588 $ 1,225,295 $ 1,200,193 Direct premiums written - Other States 101,042 88,089 263,921 229,492 Direct premiums written - Total $ 531,988 $ 500,677 $ 1,489,216 $ 1,429,685 Direct premiums earned $ 474,311 $ 452,450 $ 1,393,003 $ 1,295,858 Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Underwriting Ratios - Net Loss and loss adjustment expense ratio 87.0 % 113.7 % 78.3 % 85.5 % Policy acquisition cost ratio 16.1 % 18.8 % 17.1 % 19.5 % Other operating expense ratio 7.6 % 6.7 % 8.1 % 8.2 % Expense ratio 23.7 % 25.5 % 25.2 % 27.7 % Combined ratio 110.7 % 139.2 % 103.5 % 113.2 % As of September 30, 2023 2022 Policies in force Florida 570,339 636,883 Other States 237,214 236,043 Total 807,553 872,926 Premiums in force Florida $ 1,571,600 $ 1,529,632 Other States 342,893 303,402 Total $ 1,914,493 $ 1,833,034 Total Insured Value Florida $ 190,299,057 $ 203,957,272 Other States 130,281,463 120,648,594 Total $ 320,580,520 $ 324,605,866 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP revenue $ 360,048 $ 312,810 $ 1,016,126 $ 892,298 less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Core revenue $ 361,764 $ 316,668 $ 1,015,060 $ 909,103 GAAP operating income (loss) to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP income (loss) before income tax expense (benefit) $ (7,877 ) $ (93,237 ) $ 62,453 $ (60,086 ) add: Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 GAAP operating income (loss) (6,246 ) (91,607 ) 67,349 (55,117 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) $ 66,283 $ (38,312 ) GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP operating income (loss) (a) $ (6,246 ) $ (91,607 ) $ 67,349 $ (55,117 ) GAAP revenue (b) 360,048 312,810 1,016,126 892,298 GAAP operating income (loss) margin (a÷b) (1.7 )% (29.3 )% 6.6 % (6.2 )% Adjusted operating income (loss) (c) (4,530 ) (87,749 ) 66,283 (38,312 ) Core revenue (d) 361,764 316,668 1,015,060 909,103 Adjusted operating income (loss) margin (c÷d) (1.3 )% (27.7 )% 6.5 % (4.2 )% GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP NI (loss) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (5,918 ) (72,278 ) 46,816 (47,376 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) add: Income tax effect on above adjustments (422 ) (949 ) 262 (4,134 ) Adjusted NI (loss) available to common stockholders (f) $ (4,624 ) $ (69,369 ) $ 46,012 $ (34,705 ) Weighted average diluted common shares outstanding (g) 29,617 30,604 30,378 30,858 Diluted earnings (loss) per common share (e÷g) $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Diluted adjusted earnings (loss) per common share (f÷g) $ (0.16 ) $ (2.27 ) $ 1.51 $ (1.12 ) GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2023 2022 2022 GAAP stockholders’ equity $ 301,502 $ 260,637 $ 287,896 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 301,402 260,537 287,796 less: Accumulated other comprehensive (loss), net of taxes (107,115 ) (115,665 ) (103,782 ) Adjusted common stockholders’ equity (i) $ 408,517 $ 376,202 $ 391,578 Shares outstanding (j) 29,186 30,513 30,389 Book value per common share (h÷j) $ 10.33 $ 8.54 $ 9.47 Adjusted book value per common share (i÷j) $ 14.00 $ 12.33 $ 12.89 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2023 2022 2023 2022 2022 Actual or Annualized NI (loss) available to common stockholders (k) $ (23,672 ) $ (289,112 ) $ 62,421 $ (63,168 ) $ (22,267 ) Average common stockholders’ equity (l) 317,987 313,494 294,599 345,070 358,699 ROCE (k÷l) (7.4 )% NM* 21.2 % (18.3 )% (6.2 )% Actual or Annualized adjusted NI (loss) available to common stockholders (m) $ (18,496 ) $ (277,476 ) $ 61,349 $ (46,273 ) $ (12,618 ) Adjusted average common stockholders’ equity4 (n) 420,120 416,848 399,646 417,022 423,199 Adjusted ROCE (m÷n) (4.4 )% NM* 15.4 % (11.1 )% (3.0 )% 4 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. View source version on businesswire.com: https://www.businesswire.com/news/home/20231026478769/en/Contacts Investors: Arash Soleimani, CFA, CPA, CPCU, ARe Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Universal Reports Third Quarter 2023 Results By: Universal Insurance Holdings via Business Wire October 26, 2023 at 16:10 PM EDT Loss per common share of $0.20; adjusted* loss per common share of $0.16 Direct premiums written of $532.0 million, up 6.3% from the prior year quarter Net combined ratio of 110.7%, down 28.5 points from the prior year quarter Book value per share of $10.33, up 21.0% year-over-year; adjusted book value per share of $14.00, up 13.5% year-over-year Repurchased approximately 894 thousand shares for $12.3 million. Total capital returned to shareholders of $17.2 million, including $0.16 per share regular quarterly dividend Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2023 results. “The third quarter benefited from strong and improving underlying trends and I’m optimistic as I look forward,” said Stephen J. Donaghy, Chief Executive Officer. “During the quarter, Hurricane Idalia made Florida landfall, and, as always, we were there immediately to assist our policyholders in their time of need. The storm’s severity appears considerably smaller than initially anticipated and is comfortably absorbed within our retention. We continue to enhance our best-in-class claims infrastructure, which together with our reinsurance capabilities, serves to differentiate us from our peers. As we look forward, we are more confident in the Florida market, which is our largest geography, and have started to slowly increase new business in additional territories.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change GAAP comparison Total revenues $ 360,048 $ 312,810 15.1 % $ 1,016,126 $ 892,298 13.9 % Operating income (loss) $ (6,246 ) $ (91,607 ) (93.2 )% $ 67,349 $ (55,117 ) NM Operating income (loss) margin (1.7 )% (29.3 )% 27.6 pts 6.6 % (6.2 )% NM Net income (loss) available to common stockholders $ (5,918 ) $ (72,278 ) (91.8 )% $ 46,816 $ (47,376 ) NM Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) (91.5 )% $ 1.54 $ (1.54 ) NM Annualized ROCE (7.4 )% NM* NM 21.2 % (18.3 )% NM Book value per share, end of period $ 10.33 $ 8.54 21.0 % 10.33 $ 8.54 21.0 % Non-GAAP comparison1 Core revenue $ 361,764 $ 316,668 14.2 % $ 1,015,060 $ 909,103 11.7 % Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) (94.8 )% $ 66,283 $ (38,312 ) NM Adjusted operating income (loss) margin (1.3 )% (27.7 )% 26.4 pts 6.5 % (4.2 )% NM Adjusted net income (loss) available to common stockholders $ (4,624 ) $ (69,369 ) (93.3 )% $ 46,012 $ (34,705 ) NM Adjusted diluted earnings (loss) per common share $ (0.16 ) $ (2.27 ) (93.0 )% $ 1.51 $ (1.12 ) NM Annualized adjusted ROCE (4.4 )% NM* NM 15.4 % (11.1 )% NM Adjusted book value per share, end of period $ 14.00 $ 12.33 13.5 % $ 14.00 $ 12.33 13.5 % Underwriting Summary Premiums: Premiums in force $ 1,914,493 $ 1,833,034 4.4 % $ 1,914,493 $ 1,833,034 4.4 % Policies in force 807,553 872,926 (7.5 )% 807,553 872,926 (7.5 )% Direct premiums written $ 531,988 $ 500,677 6.3 % $ 1,489,216 $ 1,429,685 4.2 % Direct premiums earned $ 474,311 $ 452,450 4.8 % $ 1,393,003 $ 1,295,858 7.5 % Ceded premiums earned $ (143,271 ) $ (161,819 ) (11.5 )% $ (476,465 ) $ (459,102 ) 3.8 % Ceded premium ratio 30.2 % 35.8 % (5.6) pts 34.2 % 35.4 % (1.2) pts Net premiums earned $ 331,040 $ 290,631 13.9 % $ 916,538 $ 836,756 9.5 % Net ratios: Loss ratio 87.0 % 113.7 % (26.7) pts 78.3 % 85.5 % (7.2) pts Expense ratio 23.7 % 25.5 % (1.8) pts 25.2 % 27.7 % (2.5) pts Combined ratio 110.7 % 139.2 % (28.5) pts 103.5 % 113.2 % (9.7) pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income available to common stockholders, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income available to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss available to common stockholders was $5.9 million, compared to a loss of $72.3 million in the prior year quarter, and adjusted net loss available to common stockholders was $4.6 million, compared to a loss of $69.4 million in the prior year quarter. The improvement in adjusted net loss available to common stockholders mostly stems from better underwriting income and net investment income. Revenues Revenue was $360.0 million, up 15.1% from the prior year quarter and core revenue was $361.8 million, up 14.2% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue. Direct premiums written were $532.0 million, up 6.3% from the prior year quarter. The increase stems from 4.4% growth in Florida and 14.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $474.3 million, up 4.8% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 30.2%, down from 35.8% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program and direct premiums earned growth associated with primary rate increases, partly offset by higher reinsurance pricing and higher reinsurance costs associated with an increase in home values. Net premiums earned were $331.0 million, up 13.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above. Net investment income was $12.8 million, up from $6.1 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash. Commissions, policy fees and other revenue were $18.0 million, down 10.0% from the prior year quarter. The decrease primarily reflects the difference in pricing and structure associated with our reinsurance program when compared to the prior year and a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 1.7%, compared to a GAAP operating loss margin of 29.3% in the prior year quarter and the adjusted operating loss margin was 1.3%, compared to an adjusted operating loss margin of 27.7% in the prior year quarter. The improvement in the adjusted operating loss margin primarily reflects a lower net combined ratio and higher net investment income. The net loss ratio was 87.0%, down 26.7 points compared to the prior year quarter. The decrease reflects a lower current accident year net loss ratio, primarily stemming from lower weather-related losses. The net expense ratio was 23.7%, down 1.8 points from 25.5% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 110.7%, down 28.5 points compared to the prior year quarter. The decrease reflects lower net loss and expense ratios, as described above. Capital Deployment During the third quarter, the Company repurchased approximately 894 thousand shares at an aggregate cost of $12.3 million. The Company currently has $7.8 million of share repurchase authorization remaining. On July 20, 2023, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 11, 2023, to shareholders of record as of the close of business on August 4, 2023. Conference Call and Webcast Friday, October 27, 2023 at 10:00 a.m. ET Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BIcde2db8d22eb43b9be5e115c575ebeb9. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors soon after the investor call concludes. About Universal Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at universalinsuranceholdings.com. Non-GAAP Financial Measures and Key Performance Indicators This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (“SEC”), including core revenue, adjusted net income available to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders’ equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE’s business trends and to understand UVE’s operational performance. UVE’s management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Forward-Looking Statements This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “will,” “plan,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading “Risk Factors” and “Liquidity and Capital Resources” in our 2022 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company’s operations and future results, refer to the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2023 2022 ASSETS: Invested Assets Fixed maturities, at fair value $ 1,031,558 $ 1,014,626 Equity securities, at fair value 76,995 85,469 Investment real estate, net 5,572 5,711 Total invested assets 1,114,125 1,105,806 Cash and cash equivalents 343,532 388,706 Restricted cash and cash equivalents 69,488 2,635 Prepaid reinsurance premiums 379,501 282,427 Reinsurance recoverable 322,986 808,850 Premiums receivable, net 88,536 69,574 Property and equipment, net 48,729 51,404 Deferred policy acquisition costs 114,590 103,654 Goodwill 2,319 2,319 Other assets 75,049 74,779 TOTAL ASSETS $ 2,558,855 $ 2,890,154 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 551,007 $ 1,038,790 Unearned premiums 1,040,067 943,854 Advance premium 76,030 54,964 Reinsurance payable, net 388,294 384,504 Long-term debt, net 102,196 102,769 Other liabilities 99,759 77,377 Total liabilities 2,257,353 2,602,258 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 473 472 Treasury shares, at cost - 18,080 and 16,790 (257,143 ) (238,758 ) Additional paid-in capital 115,922 112,509 Accumulated other comprehensive income (loss), net of taxes (107,115 ) (103,782 ) Retained earnings 549,365 517,455 Total stockholders' equity 301,502 287,896 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,558,855 $ 2,890,154 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,266 and 47,179 shares; Outstanding 29,186 and 30,389 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 REVENUES Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Net investment income 12,755 6,074 34,735 15,337 Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Commission revenue 10,830 12,592 43,098 35,157 Policy fees 5,111 5,272 14,662 15,991 Other revenue 2,028 2,099 6,027 5,862 Total revenues 360,048 312,810 1,016,126 892,298 EXPENSES Losses and loss adjustment expenses 287,972 330,444 717,853 715,854 Policy acquisition costs 53,180 54,609 156,877 163,432 Other operating expenses 25,142 19,364 74,047 68,129 Total operating costs and expenses 366,294 404,417 948,777 947,415 Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 Income (loss) before income tax expense (benefit) (7,877 ) (93,237 ) 62,453 (60,086 ) Income tax expense (benefit) (1,962 ) (20,962 ) 15,629 (12,718 ) NET INCOME (LOSS) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Weighted average common shares outstanding - basic 29,617 30,604 30,087 30,858 Weighted average common shares outstanding - diluted 29,617 30,604 30,378 30,858 Shares outstanding, end of period 29,186 30,513 29,186 30,513 Basic earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.56 $ (1.54 ) Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 10.33 $ 8.54 $ 10.33 $ 8.54 Annualized return on average common equity (ROCE) (7.4 )% NM* 21.2 % (18.3 )% *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Premiums Direct premiums written - Florida $ 430,946 $ 412,588 $ 1,225,295 $ 1,200,193 Direct premiums written - Other States 101,042 88,089 263,921 229,492 Direct premiums written - Total $ 531,988 $ 500,677 $ 1,489,216 $ 1,429,685 Direct premiums earned $ 474,311 $ 452,450 $ 1,393,003 $ 1,295,858 Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Underwriting Ratios - Net Loss and loss adjustment expense ratio 87.0 % 113.7 % 78.3 % 85.5 % Policy acquisition cost ratio 16.1 % 18.8 % 17.1 % 19.5 % Other operating expense ratio 7.6 % 6.7 % 8.1 % 8.2 % Expense ratio 23.7 % 25.5 % 25.2 % 27.7 % Combined ratio 110.7 % 139.2 % 103.5 % 113.2 % As of September 30, 2023 2022 Policies in force Florida 570,339 636,883 Other States 237,214 236,043 Total 807,553 872,926 Premiums in force Florida $ 1,571,600 $ 1,529,632 Other States 342,893 303,402 Total $ 1,914,493 $ 1,833,034 Total Insured Value Florida $ 190,299,057 $ 203,957,272 Other States 130,281,463 120,648,594 Total $ 320,580,520 $ 324,605,866 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP revenue $ 360,048 $ 312,810 $ 1,016,126 $ 892,298 less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Core revenue $ 361,764 $ 316,668 $ 1,015,060 $ 909,103 GAAP operating income (loss) to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP income (loss) before income tax expense (benefit) $ (7,877 ) $ (93,237 ) $ 62,453 $ (60,086 ) add: Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 GAAP operating income (loss) (6,246 ) (91,607 ) 67,349 (55,117 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) $ 66,283 $ (38,312 ) GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP operating income (loss) (a) $ (6,246 ) $ (91,607 ) $ 67,349 $ (55,117 ) GAAP revenue (b) 360,048 312,810 1,016,126 892,298 GAAP operating income (loss) margin (a÷b) (1.7 )% (29.3 )% 6.6 % (6.2 )% Adjusted operating income (loss) (c) (4,530 ) (87,749 ) 66,283 (38,312 ) Core revenue (d) 361,764 316,668 1,015,060 909,103 Adjusted operating income (loss) margin (c÷d) (1.3 )% (27.7 )% 6.5 % (4.2 )% GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP NI (loss) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (5,918 ) (72,278 ) 46,816 (47,376 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) add: Income tax effect on above adjustments (422 ) (949 ) 262 (4,134 ) Adjusted NI (loss) available to common stockholders (f) $ (4,624 ) $ (69,369 ) $ 46,012 $ (34,705 ) Weighted average diluted common shares outstanding (g) 29,617 30,604 30,378 30,858 Diluted earnings (loss) per common share (e÷g) $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Diluted adjusted earnings (loss) per common share (f÷g) $ (0.16 ) $ (2.27 ) $ 1.51 $ (1.12 ) GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2023 2022 2022 GAAP stockholders’ equity $ 301,502 $ 260,637 $ 287,896 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 301,402 260,537 287,796 less: Accumulated other comprehensive (loss), net of taxes (107,115 ) (115,665 ) (103,782 ) Adjusted common stockholders’ equity (i) $ 408,517 $ 376,202 $ 391,578 Shares outstanding (j) 29,186 30,513 30,389 Book value per common share (h÷j) $ 10.33 $ 8.54 $ 9.47 Adjusted book value per common share (i÷j) $ 14.00 $ 12.33 $ 12.89 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2023 2022 2023 2022 2022 Actual or Annualized NI (loss) available to common stockholders (k) $ (23,672 ) $ (289,112 ) $ 62,421 $ (63,168 ) $ (22,267 ) Average common stockholders’ equity (l) 317,987 313,494 294,599 345,070 358,699 ROCE (k÷l) (7.4 )% NM* 21.2 % (18.3 )% (6.2 )% Actual or Annualized adjusted NI (loss) available to common stockholders (m) $ (18,496 ) $ (277,476 ) $ 61,349 $ (46,273 ) $ (12,618 ) Adjusted average common stockholders’ equity4 (n) 420,120 416,848 399,646 417,022 423,199 Adjusted ROCE (m÷n) (4.4 )% NM* 15.4 % (11.1 )% (3.0 )% 4 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. View source version on businesswire.com: https://www.businesswire.com/news/home/20231026478769/en/Contacts Investors: Arash Soleimani, CFA, CPA, CPCU, ARe Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com
Loss per common share of $0.20; adjusted* loss per common share of $0.16 Direct premiums written of $532.0 million, up 6.3% from the prior year quarter Net combined ratio of 110.7%, down 28.5 points from the prior year quarter Book value per share of $10.33, up 21.0% year-over-year; adjusted book value per share of $14.00, up 13.5% year-over-year Repurchased approximately 894 thousand shares for $12.3 million. Total capital returned to shareholders of $17.2 million, including $0.16 per share regular quarterly dividend
Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2023 results. “The third quarter benefited from strong and improving underlying trends and I’m optimistic as I look forward,” said Stephen J. Donaghy, Chief Executive Officer. “During the quarter, Hurricane Idalia made Florida landfall, and, as always, we were there immediately to assist our policyholders in their time of need. The storm’s severity appears considerably smaller than initially anticipated and is comfortably absorbed within our retention. We continue to enhance our best-in-class claims infrastructure, which together with our reinsurance capabilities, serves to differentiate us from our peers. As we look forward, we are more confident in the Florida market, which is our largest geography, and have started to slowly increase new business in additional territories.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change GAAP comparison Total revenues $ 360,048 $ 312,810 15.1 % $ 1,016,126 $ 892,298 13.9 % Operating income (loss) $ (6,246 ) $ (91,607 ) (93.2 )% $ 67,349 $ (55,117 ) NM Operating income (loss) margin (1.7 )% (29.3 )% 27.6 pts 6.6 % (6.2 )% NM Net income (loss) available to common stockholders $ (5,918 ) $ (72,278 ) (91.8 )% $ 46,816 $ (47,376 ) NM Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) (91.5 )% $ 1.54 $ (1.54 ) NM Annualized ROCE (7.4 )% NM* NM 21.2 % (18.3 )% NM Book value per share, end of period $ 10.33 $ 8.54 21.0 % 10.33 $ 8.54 21.0 % Non-GAAP comparison1 Core revenue $ 361,764 $ 316,668 14.2 % $ 1,015,060 $ 909,103 11.7 % Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) (94.8 )% $ 66,283 $ (38,312 ) NM Adjusted operating income (loss) margin (1.3 )% (27.7 )% 26.4 pts 6.5 % (4.2 )% NM Adjusted net income (loss) available to common stockholders $ (4,624 ) $ (69,369 ) (93.3 )% $ 46,012 $ (34,705 ) NM Adjusted diluted earnings (loss) per common share $ (0.16 ) $ (2.27 ) (93.0 )% $ 1.51 $ (1.12 ) NM Annualized adjusted ROCE (4.4 )% NM* NM 15.4 % (11.1 )% NM Adjusted book value per share, end of period $ 14.00 $ 12.33 13.5 % $ 14.00 $ 12.33 13.5 % Underwriting Summary Premiums: Premiums in force $ 1,914,493 $ 1,833,034 4.4 % $ 1,914,493 $ 1,833,034 4.4 % Policies in force 807,553 872,926 (7.5 )% 807,553 872,926 (7.5 )% Direct premiums written $ 531,988 $ 500,677 6.3 % $ 1,489,216 $ 1,429,685 4.2 % Direct premiums earned $ 474,311 $ 452,450 4.8 % $ 1,393,003 $ 1,295,858 7.5 % Ceded premiums earned $ (143,271 ) $ (161,819 ) (11.5 )% $ (476,465 ) $ (459,102 ) 3.8 % Ceded premium ratio 30.2 % 35.8 % (5.6) pts 34.2 % 35.4 % (1.2) pts Net premiums earned $ 331,040 $ 290,631 13.9 % $ 916,538 $ 836,756 9.5 % Net ratios: Loss ratio 87.0 % 113.7 % (26.7) pts 78.3 % 85.5 % (7.2) pts Expense ratio 23.7 % 25.5 % (1.8) pts 25.2 % 27.7 % (2.5) pts Combined ratio 110.7 % 139.2 % (28.5) pts 103.5 % 113.2 % (9.7) pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income available to common stockholders, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income available to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss available to common stockholders was $5.9 million, compared to a loss of $72.3 million in the prior year quarter, and adjusted net loss available to common stockholders was $4.6 million, compared to a loss of $69.4 million in the prior year quarter. The improvement in adjusted net loss available to common stockholders mostly stems from better underwriting income and net investment income. Revenues Revenue was $360.0 million, up 15.1% from the prior year quarter and core revenue was $361.8 million, up 14.2% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue. Direct premiums written were $532.0 million, up 6.3% from the prior year quarter. The increase stems from 4.4% growth in Florida and 14.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $474.3 million, up 4.8% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 30.2%, down from 35.8% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program and direct premiums earned growth associated with primary rate increases, partly offset by higher reinsurance pricing and higher reinsurance costs associated with an increase in home values. Net premiums earned were $331.0 million, up 13.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above. Net investment income was $12.8 million, up from $6.1 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash. Commissions, policy fees and other revenue were $18.0 million, down 10.0% from the prior year quarter. The decrease primarily reflects the difference in pricing and structure associated with our reinsurance program when compared to the prior year and a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 1.7%, compared to a GAAP operating loss margin of 29.3% in the prior year quarter and the adjusted operating loss margin was 1.3%, compared to an adjusted operating loss margin of 27.7% in the prior year quarter. The improvement in the adjusted operating loss margin primarily reflects a lower net combined ratio and higher net investment income. The net loss ratio was 87.0%, down 26.7 points compared to the prior year quarter. The decrease reflects a lower current accident year net loss ratio, primarily stemming from lower weather-related losses. The net expense ratio was 23.7%, down 1.8 points from 25.5% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 110.7%, down 28.5 points compared to the prior year quarter. The decrease reflects lower net loss and expense ratios, as described above. Capital Deployment During the third quarter, the Company repurchased approximately 894 thousand shares at an aggregate cost of $12.3 million. The Company currently has $7.8 million of share repurchase authorization remaining. On July 20, 2023, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 11, 2023, to shareholders of record as of the close of business on August 4, 2023. Conference Call and Webcast Friday, October 27, 2023 at 10:00 a.m. ET Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BIcde2db8d22eb43b9be5e115c575ebeb9. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors soon after the investor call concludes. About Universal Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at universalinsuranceholdings.com. Non-GAAP Financial Measures and Key Performance Indicators This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (“SEC”), including core revenue, adjusted net income available to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders’ equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE’s business trends and to understand UVE’s operational performance. UVE’s management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Forward-Looking Statements This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “will,” “plan,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading “Risk Factors” and “Liquidity and Capital Resources” in our 2022 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company’s operations and future results, refer to the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2023 2022 ASSETS: Invested Assets Fixed maturities, at fair value $ 1,031,558 $ 1,014,626 Equity securities, at fair value 76,995 85,469 Investment real estate, net 5,572 5,711 Total invested assets 1,114,125 1,105,806 Cash and cash equivalents 343,532 388,706 Restricted cash and cash equivalents 69,488 2,635 Prepaid reinsurance premiums 379,501 282,427 Reinsurance recoverable 322,986 808,850 Premiums receivable, net 88,536 69,574 Property and equipment, net 48,729 51,404 Deferred policy acquisition costs 114,590 103,654 Goodwill 2,319 2,319 Other assets 75,049 74,779 TOTAL ASSETS $ 2,558,855 $ 2,890,154 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 551,007 $ 1,038,790 Unearned premiums 1,040,067 943,854 Advance premium 76,030 54,964 Reinsurance payable, net 388,294 384,504 Long-term debt, net 102,196 102,769 Other liabilities 99,759 77,377 Total liabilities 2,257,353 2,602,258 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 473 472 Treasury shares, at cost - 18,080 and 16,790 (257,143 ) (238,758 ) Additional paid-in capital 115,922 112,509 Accumulated other comprehensive income (loss), net of taxes (107,115 ) (103,782 ) Retained earnings 549,365 517,455 Total stockholders' equity 301,502 287,896 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,558,855 $ 2,890,154 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,266 and 47,179 shares; Outstanding 29,186 and 30,389 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 REVENUES Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Net investment income 12,755 6,074 34,735 15,337 Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Commission revenue 10,830 12,592 43,098 35,157 Policy fees 5,111 5,272 14,662 15,991 Other revenue 2,028 2,099 6,027 5,862 Total revenues 360,048 312,810 1,016,126 892,298 EXPENSES Losses and loss adjustment expenses 287,972 330,444 717,853 715,854 Policy acquisition costs 53,180 54,609 156,877 163,432 Other operating expenses 25,142 19,364 74,047 68,129 Total operating costs and expenses 366,294 404,417 948,777 947,415 Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 Income (loss) before income tax expense (benefit) (7,877 ) (93,237 ) 62,453 (60,086 ) Income tax expense (benefit) (1,962 ) (20,962 ) 15,629 (12,718 ) NET INCOME (LOSS) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Weighted average common shares outstanding - basic 29,617 30,604 30,087 30,858 Weighted average common shares outstanding - diluted 29,617 30,604 30,378 30,858 Shares outstanding, end of period 29,186 30,513 29,186 30,513 Basic earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.56 $ (1.54 ) Diluted earnings (loss) per common share $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 10.33 $ 8.54 $ 10.33 $ 8.54 Annualized return on average common equity (ROCE) (7.4 )% NM* 21.2 % (18.3 )% *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Premiums Direct premiums written - Florida $ 430,946 $ 412,588 $ 1,225,295 $ 1,200,193 Direct premiums written - Other States 101,042 88,089 263,921 229,492 Direct premiums written - Total $ 531,988 $ 500,677 $ 1,489,216 $ 1,429,685 Direct premiums earned $ 474,311 $ 452,450 $ 1,393,003 $ 1,295,858 Net premiums earned $ 331,040 $ 290,631 $ 916,538 $ 836,756 Underwriting Ratios - Net Loss and loss adjustment expense ratio 87.0 % 113.7 % 78.3 % 85.5 % Policy acquisition cost ratio 16.1 % 18.8 % 17.1 % 19.5 % Other operating expense ratio 7.6 % 6.7 % 8.1 % 8.2 % Expense ratio 23.7 % 25.5 % 25.2 % 27.7 % Combined ratio 110.7 % 139.2 % 103.5 % 113.2 % As of September 30, 2023 2022 Policies in force Florida 570,339 636,883 Other States 237,214 236,043 Total 807,553 872,926 Premiums in force Florida $ 1,571,600 $ 1,529,632 Other States 342,893 303,402 Total $ 1,914,493 $ 1,833,034 Total Insured Value Florida $ 190,299,057 $ 203,957,272 Other States 130,281,463 120,648,594 Total $ 320,580,520 $ 324,605,866 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP revenue $ 360,048 $ 312,810 $ 1,016,126 $ 892,298 less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Core revenue $ 361,764 $ 316,668 $ 1,015,060 $ 909,103 GAAP operating income (loss) to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP income (loss) before income tax expense (benefit) $ (7,877 ) $ (93,237 ) $ 62,453 $ (60,086 ) add: Interest and amortization of debt issuance costs 1,631 1,630 4,896 4,969 GAAP operating income (loss) (6,246 ) (91,607 ) 67,349 (55,117 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) Adjusted operating income (loss) $ (4,530 ) $ (87,749 ) $ 66,283 $ (38,312 ) GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP operating income (loss) (a) $ (6,246 ) $ (91,607 ) $ 67,349 $ (55,117 ) GAAP revenue (b) 360,048 312,810 1,016,126 892,298 GAAP operating income (loss) margin (a÷b) (1.7 )% (29.3 )% 6.6 % (6.2 )% Adjusted operating income (loss) (c) (4,530 ) (87,749 ) 66,283 (38,312 ) Core revenue (d) 361,764 316,668 1,015,060 909,103 Adjusted operating income (loss) margin (c÷d) (1.3 )% (27.7 )% 6.5 % (4.2 )% GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 GAAP NI (loss) $ (5,915 ) $ (72,275 ) $ 46,824 $ (47,368 ) less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (5,918 ) (72,278 ) 46,816 (47,376 ) less: Net realized gains (losses) on investments (431 ) 292 (337 ) (375 ) less: Net change in unrealized gains (losses) of equity securities (1,285 ) (4,150 ) 1,403 (16,430 ) add: Income tax effect on above adjustments (422 ) (949 ) 262 (4,134 ) Adjusted NI (loss) available to common stockholders (f) $ (4,624 ) $ (69,369 ) $ 46,012 $ (34,705 ) Weighted average diluted common shares outstanding (g) 29,617 30,604 30,378 30,858 Diluted earnings (loss) per common share (e÷g) $ (0.20 ) $ (2.36 ) $ 1.54 $ (1.54 ) Diluted adjusted earnings (loss) per common share (f÷g) $ (0.16 ) $ (2.27 ) $ 1.51 $ (1.12 ) GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2023 2022 2022 GAAP stockholders’ equity $ 301,502 $ 260,637 $ 287,896 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 301,402 260,537 287,796 less: Accumulated other comprehensive (loss), net of taxes (107,115 ) (115,665 ) (103,782 ) Adjusted common stockholders’ equity (i) $ 408,517 $ 376,202 $ 391,578 Shares outstanding (j) 29,186 30,513 30,389 Book value per common share (h÷j) $ 10.33 $ 8.54 $ 9.47 Adjusted book value per common share (i÷j) $ 14.00 $ 12.33 $ 12.89 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2023 2022 2023 2022 2022 Actual or Annualized NI (loss) available to common stockholders (k) $ (23,672 ) $ (289,112 ) $ 62,421 $ (63,168 ) $ (22,267 ) Average common stockholders’ equity (l) 317,987 313,494 294,599 345,070 358,699 ROCE (k÷l) (7.4 )% NM* 21.2 % (18.3 )% (6.2 )% Actual or Annualized adjusted NI (loss) available to common stockholders (m) $ (18,496 ) $ (277,476 ) $ 61,349 $ (46,273 ) $ (12,618 ) Adjusted average common stockholders’ equity4 (n) 420,120 416,848 399,646 417,022 423,199 Adjusted ROCE (m÷n) (4.4 )% NM* 15.4 % (11.1 )% (3.0 )% 4 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis. 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Investors: Arash Soleimani, CFA, CPA, CPCU, ARe Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com